The Bank of England has lifted its benchmark interest rate by a quarter percentage point, bringing it to a 15-year high of 4.5%. 

Days ago, Golden Sachs warned that the Bank of England may be compelled to hike interest rates to 5% this summer as Britain battles to reduce the highest rates of inflation among the G7 group of major nations.

Only a few weeks after Andrew Bailey said the UK economy had turned a corner, the Bank of England governor said, "But let me be clear, inflation remains too high and it's our job to get it all the way down to the 2% target and have it stay there."

"And this is why today we've increased bank rate by naught point two five percentage points to four and a half percent," he added.

The Bank of England has now hiked interest rates many times, prompting economists such as Professor Keith Pilbeam to doubt the effectiveness of the move.

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According to Keith Pilbeam, Professor of Economics, City University, London, the new rate rise is an indication of the "failure" of the bank to do its job earlier. He believes that had the bank raised the rates earlier, "we probably wouldn't be headed to even higher rates down the road and, certainly, inflation would have been brought back under control."

According to experts, the rate hike will have ramifications for other areas of the economy, such as the property market, where two and a half million Britons will soon have to renew their house loans at higher interest rates.

For months, wholesale energy price spikes driven by self-imposed sanctions over the Ukraine war were blamed for the uncontrollable inflation. Since then, energy prices have fallen, but inflation has not.

According to Pilbeam, "What did Rishi Sunak do when he was Chancellor of the Exchequer? He borrowed well over 300 billion pounds, increasing the fiscal deficit to 15% of GDP."

"How was that financed? It wasn't financed through tax rises; it wasn't financed through some sort of government cuts or anything like that. It was financed purely by printing of money by the Bank of England, 300 billion in one go, raising the UK money supply from 600 billion to 900 billion in the space of one year."

Inflation remains in double digits in the UK after decreasing less than predicted in March, to 10.1%, as British consumers faced the highest annual rise in food and drink costs since 1977.

Inflation remaining higher than predicted would put further strain on people in the midst of the cost-of-living crisis and would be humiliating for the government following Rishi Sunak's commitment to half the rate of inflation this year. When he made the commitment, the inflation rate was 10.7%